Maple-Brown Abbott Limited and Its Controlled Entities ABN

Transcription

1 Maple-Brown Abbott Limited and Its Controlled Entities ABN Consolidated Annual Financial Report 30 June

2 Contents Directors Report 1 Lead Auditor s Independence Declaration 6 Statement of Comprehensive Income 7 Statement of Financial Position 8 Statement of Changes in Equity 9 Statement of Cash Flows Directors declaration 36 Independent Auditor s Report 37

3 ABN Directors Report The Directors present their report together with the consolidated financial statements of the Group comprising Maple-Brown Abbott Limited (the Company) and its subsidiaries for the year ended 30 June and the auditors report thereon. Directors The following persons were Directors at any time during or since the end of the financial year: Mr J K Kightley Age: 65 Directorships include HammondCare Health and Hospitals Limited and HammondCare Bachelor of Commerce; Master of Philosophy (Oxon) Member of the Institute of Chartered Accountants, South Africa Member of the CFA Institute Director since 1994 Mr T T Robinson Age: 61 Directorships include Maitland Mutual Building Society Limited Bachelor of Commerce, Bachelor of Laws Director since 2013 Mr R A R Lee Age: 53 Directorships include Westmead IVF Pty Limited and Silex Limited Master of Business Administration, Bachelor of Science Director since 2015 Ms J A Elliott Age: 53 Directorships include Clarius Group Limited Bachelor of Arts, Bachelor of Laws, Master of Arts Public Member of Australian Press Council Director since Mr G M Rossler Age: 61 Master of Commerce Member of the Institute of Chartered Accountants, South Africa Member of the CFA Institute Director since

4 ABN Directors Report (continued) Directors (continued) Mr R A Grundy Age: 56 Bachelor of Economics Member of Chartered Accountants Australia and New Zealand Director since 2008 Mr G R Bazzan Age: 46 Bachelor of Business (Hons) Member of the CFA Institute Director since 2008 Mr D L Maple-Brown Age: 48 Bachelor of Economics, Bachelor of Laws (Hons) Member of the CFA Institute Director since 2009 Company Secretary Mr D A Smedley Age: 56 Bachelor of Commerce Member of Chartered Accountants Australia and New Zealand Member of the CFA Institute Appointed 1 July

5 ABN Directors Report (continued) Directors' meetings The number of Directors' meetings and the number of meetings eligible to be attended by each of the Directors of the Company during the financial year are: Director No. of meetings attended No. of meetings eligible to attend Board A&CC DDC RC Board A&CC DDC RC Mr J K Kightley Mr T T Robinson Mr R A R Lee Ms J A Elliott Mr G M Rossler Mr R A Grundy 7 7 Mr G R Bazzan 4 7 Mr D L Maple-Brown 6 7 A&CC =Audit and Compliance Committee, DDC= Due Diligence Committee, RC= Remuneration Committee Principal activities The principal activity of the Group during the course of the year was investment management. There were no significant changes in the nature of the activities of the Group during the year. Result The profit for the year for the Group amounted to 22,741,394 (: 14,611,950) of which 13,382,995 (: 10,986,592) was attributable to the owners of the Company. Review of operations The Australian equities market (S&P/ASX 300 Total Return Index) returned 13.2% for the financial year (: 13.8%). The increase in net profit resulted from new business in the Asia Pacific and Global Listed Infrastructure strategies, positive portfolio returns in Australian equity and Asia Pacific strategies and inflows from existing clients in the Asia Pacific strategies. These factors were offset by net outflows in the Australian equity strategy. The total fees for the Group increased by 34.8% compared to the previous year, costs increased by 14.7%. Dividends Dividends paid by the Company to members during the financial year were: Date paid Per share Total amount 8 September ,157,500 9 March ,135, June ,000,050 All dividends paid by the Company during the financial year were fully franked. 3

6 ABN Directors Report (continued) State of affairs In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the financial year under review not otherwise disclosed in this report or the consolidated financial statements. Events subsequent to balance date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Group, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. Likely developments The Group will continue to pursue its principal activity as detailed earlier in this report. Directors interests The relevant interest of each person who was a Director during the financial year in the ordinary share capital of the Company as at the date of this report is: Mr J K Kightley 28,500 ordinary shares Directors benefits There were no benefits received by directors from the Company during the financial year other than remuneration which is disclosed separately in Note 19 to these consolidated financial statements. Indemnification and insurance of directors and officers The Articles of the Company in conjunction with the Deeds of Access, Insurance and Indemnity, indemnify the directors and officers against all liabilities to another person (other than the Company or related party) that may arise from their position as directors or officers of the Company, except where the liability arises out of conduct involving lack of good faith. The Articles stipulate that the Company will meet the full amount of any such liabilities, including costs and expenses. In accordance with the provisions of the Corporations Act 2001, the Company has a directors and officers liability policy which covers all Directors and officers of the Group. The terms of the policy specifically prohibit disclosure of details of the amount of the insurance cover and the premium paid. 4

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9 Statement of Comprehensive Income Consolidated Company Note Revenue Management and performance fees 66,985,898 49,685,517 66,985,898 49,685,517 Interest income 996, , , ,715 Movement in fair value of investments 363, , , ,303 Dividend income - - 4,603,500 1,040,000 Other operating revenue 87, ,232 87, ,232 68,433,217 51,083,135 72,854,215 52,067,767 Expenses Amortisation of intangible assets 3(j), 12 1,490,020 1,399,903 1,490,020 1,399,903 Custody, administration and distribution costs 4,282,661 4,257,556 34,173,523 15,523,146 Depreciation of property, plant and equipment , , , ,399 Insurance 590, , , ,956 Legal costs 500, , , ,416 Rental expense 752, , , ,458 Professional services 1,361,817 1,405,676 1,361,817 1,405,676 Remuneration 23,120,780 18,981,414 20,476,894 18,350,936 Subscriptions and data 1,281,855 1,076,655 1,281,855 1,076,655 Sundry expenses 1,777,283 1,791,028 1,777,145 1,790,650 Total expenses 35,315,627 30,789,461 62,562,465 41,424,195 Profit before income tax 33,117,590 20,293,674 10,291,750 10,643,572 Income tax expense 5(a) 10,376,196 5,681,724 2,147,150 2,474,526 Profit for the year 22,741,394 14,611,950 8,144,600 8,169,046 Other comprehensive income, net of income tax Total comprehensive income for the year 22,741,394 14,611,950 8,144,600 8,169,046 Total comprehensive income attributable to: Owners of the Company 13,382,995 10,986,592 8,144,600 8,169,046 Non-controlling interests 15(b) 9,358,399 3,625, ,741,394 14,611,950 8,144,600 8,169,046 The Statements of Comprehensive Income are to be read in conjunction with the accompanying notes. 7

10 Statement of Financial Position As at 30 June Consolidated Company Note Current assets Cash and cash equivalents 7 37,217,889 39,423,959 20,670,097 30,387,046 Receivables 8 15,476,227 10,672,174 19,014,685 15,116,404 Other current assets , , , ,609 Total current assets 53,238,597 50,454,742 40,229,263 45,862,059 Non-current assets Investments At fair value through profit or loss 9(a) 7,120,980 6,757,404 7,120,980 6,757,404 At amortised cost 9(b) 1,500,000-1,500,000 - In subsidiaries - at cost 9(c) ,415 57,705 Property, plant and equipment , , , ,164 Intangible assets ,253 1,676, ,253 1,676,273 Deferred tax assets - net 5(c) 1,941, ,545 1,941, ,545 Total non-current assets 10,974,017 9,558,386 11,184,432 9,616,091 Total assets 64,212,614 60,013,128 51,413,695 55,478,150 Current liabilities Trade and other payables 13 4,803,369 2,717,591 17,057,151 9,312,364 Provision for current income tax 5(b) 7,999,752 3,565,624 1,018, ,660 Provision for employee benefits - current 14 7,337,091 2,467,222 7,337,091 2,467,222 Total current liabilities 20,140,212 8,750,437 25,412,664 12,139,246 Non-current liabilities Provision for employee benefits - non-current ,206 3,101, ,206 3,101,129 Total non-current liabilities 911,206 3,101, ,206 3,101,129 Total liabilities 21,051,418 11,851,566 26,323,870 15,240,375 Net assets 43,161,196 48,161,562 25,089,825 40,237,775 Equity Share capital 15(a) 10,847,270 10,847,270 10,847,270 10,847,270 Reserve 15(b) (132,425) (8,051) - - Retained earnings 23,546,958 33,456,513 14,242,555 29,390,505 Total equity attributable to holders of the Company 34,261,803 44,295,732 25,089,825 40,237,775 Non-controlling interests 15(b) 8,899,393 3,865, Total equity 43,161,196 48,161,562 25,089,825 40,237,775 The Statements of Financial Position are to be read in conjunction with the accompanying notes. 8

11 Statement of Changes in Equity Consolidated Company Attributable to owners of the Company Share Capital Retained Reserve Total Non- Total equity Share Capital Retained Total earnings controlling earnings interests Balance as at 30 June 10,847,270 33,456,513 _ (8,051) 44,295,732 3,865,830 48,161,562 10,847,270 29,390,505 40,237,775 Total comprehensive income - 13,382,995-13,382,995 9,358,399 22,741,394-8,144,600 8,144,600 Transactions with owners of the Company Dividends - (23,292,550) - (23,292,550) (4,296,500) (27,589,050) - (23,292,550) (23,292,550) Acquisition of non-controlling interests without a change in control - - (124,374) (124,374) (28,336) (152,710) Total transactions with owners of the Company - (23,292,550) (124,374) (23,416,924) (4,324,836) (27,741,760) - (23,292,550) (23,292,550) Balance as at 30 June 10,847,270 23,546,958 (132,425) 34,261,803 8,899,393 43,161,196 10,847,270 14,242,555 25,089,825 Balance as at 30 June ,847,270 30,649,921 (8,051) 41,489,140 1,200,472 42,689,612 10,847,270 29,401,459 40,248,729 Total comprehensive income - 10,986,592-10,986,592 3,625,358 14,611,950-8,169,046 8,169,046 Transactions with owners of the Company Dividends - (8,180,000) - (8,180,000) (960,000) (9,140,000) - (8,180,000) (8,180,000) Total transactions with owners of the Company - (8,180,000) - (8,180,000) (960,000) (9,140,000) - (8,180,000) (8,180,000) Balance as at 30 June 10,847,270 33,456,513 (8,051) 44,295,732 3,865,830 48,161,562 10,847,270 29,390,505 40,237,775 The Statements of Changes in Equity are to be read in conjunction with the accompanying notes. 9

12 Statement of Cash Flows Consolidated Company Note Cash flows from operating activities Cash receipts in the course of operations 70,984,250 53,712,789 67,579,045 56,468,102 Cash payments in the course of operations (35,468,827) (30,650,442) (54,753,506) (45,910,361) Goods and services tax paid (2,774,066) (2,652,849) (800,253) (1,934,379) Income tax paid 5(b) (7,083,985) (3,039,602) (2,630,305) (2,067,910) Net cash provided by operating activities 18(ii) 25,657,372 17,369,896 9,394,981 6,555,452 Cash flows from investing activities Payments for investments (1,500,000) - (1,500,000) - Payments for property, plant and equipment (60,800) (262,054) (60,800) (262,054) Distributions received from investments 130,646 45, ,646 45,502 Dividends received from subsidiaries - - 4,603,500 1,040,000 Interest received 1,308, ,290 1,159, ,396 Net cash (used in)/provided by investing activities (121,682) 204,738 4,333,330 1,196,844 Cash flows from financing activities Dividends paid (27,589,050) (9,140,000) (23,292,550) (8,180,000) Acquisition of non-controlling interests (152,710) - (152,710) - Net cash used in financing activities (27,741,760) (9,140,000) (23,445,260) (8,180,000) Net (decrease)/increase in cash held (2,206,070) 8,434,634 (9,716,949) (427,704) Cash at the beginning of the financial year 7,18(i) 39,423,959 30,989,325 30,387,046 30,814,750 Cash at the end of the financial year 7,18(i) 37,217,889 39,423,959 20,670,097 30,387,046 The Statements of Cash Flows is to be read in conjunction with the accompanying notes. 10

13 1 Reporting entity Maple-Brown Abbott Limited ( the Company ) is a company limited by shares, incorporated and domiciled in Australia. These consolidated financial statements comprise the Company and its subsidiaries (collectively the Group). The registered office and principal place of business of the Group is Level 31, 259 George Street, Sydney, NSW, The Group is a for-profit entity and is primarily involved in investment management. 2 Basis of preparation (a) Basis of accounting The consolidated financial statements of the Group and the financial statements of the Company ( the financial statements ) are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act The financial statements comply with the International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB). The financial statements were authorised by the Board of Directors for issue on 13 September. (b) (c) (d) Basis of measurement The financial statements have been prepared on the basis of historical cost principles, except for investments in quoted companies and unit trusts which are measured at fair value. Functional and presentation currency These financial statements are presented in Australian dollars, rounded to the nearest dollar, which is also the Group s functional currency. Use of estimates and judgements The preparation of the financial statements in conformity with accounting standards requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods. Information about the critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in of the financial statements are outlined below: Intangible assets These assets are amortised on a reducing balance basis over the first four years of the expected life of the assets and a straight-line basis for the remaining three. The assets are reviewed for impairment annually by preparing a calculation of the present value of the expected future cash flows and discounted using a risk adjusted discount rate (refer to Note 3(j)). 11

14 2 Basis of preparation (continued) (d) Use of estimates and judgements (continued) Retention incentive The provision for the retention incentive has been calculated at fair value after estimating the probability of payment due to the achievement of the performance hurdles by eligible employees. Fair value is based on the price of shares calculated in accordance with the Rules of the Company s Executive Share Purchase Scheme. The probability of payment is assessed at the end of each reporting period. Long term incentive The provision for long term incentive has been calculated at fair value after estimating the probability of payment due to the achievement of the performance hurdles by eligible employees. Fair value is based on the most recent estimate of future profits. The probability of payment is assessed at the end of each reporting period. 3 Summary of significant accounting policies The significant accounting policies adopted in the preparation of this financial report are set out below. The accounting policies adopted in the preparation of the financial statements have been applied consistently to all periods presented in the financial statements (a) Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements of the Group from the date on which control commences until the date on which control ceases. Non-controlling interests Non-controlling interests are measured at their proportionate share of the acquiree s identifiable net assets at the acquisition date. Changes in the Group s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the Company. 12

15 3 Summary of significant accounting policies (continued) (b) Revenue recognition Fees Management fees are recognised as income when services are provided, in the period to which they relate and are generally based on the value of the funds under management. The Group may earn a performance fee from its funds and discrete client portfolios. The Group is entitled to performance fees when the portfolio outperforms certain performance hurdles. Performance fees are recognised when these performance hurdles are met. Interest income Interest Income is recognised on an accruals basis. Distributions Distribution income from unlisted unit trusts is recognised when the Group is entitled to the distribution, which is as at the date the unit price is quoted ex-distribution. Movement in fair value of investments Movement in the fair value of financial instruments held at fair value through profit and loss is determined as the difference between the fair value at year end or consideration received (if sold during the year) and the fair value as at the prior year end or acquisition (if the investment was acquired during the year). (c) Income tax Income tax on the result for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the year, using current tax rates and any adjustment to tax payable in respect of previous financial periods. Deferred tax expense is the change in deferred tax assets and liabilities between the reporting periods. Deferred tax assets and liabilities are recognised using the balance sheet method for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, except for particular circumstances when no deferred tax asset or liability is recognised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at reporting date. Deferred tax assets which relates to employee provisions are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. (d) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. 13

16 3 Summary of significant accounting policies (continued) (d) Goods and services tax (continued) Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (e) (f) (g) Cash and cash equivalents Cash and cash equivalents comprise cash at bank, cash on hand and term deposits with maturities of 12 months or less. The net carrying amount of cash and cash equivalents is equivalent to the fair value of the assets because of the negligible credit risk and frequent repricing. Except for the Operational Risk Financial Requirement (refer to Note 9 (b), there are no cash balances held that are not available for use in normal operations. Receivables Receivables are stated at the amounts to be received in the future and are presented net of any provision for impairment. The balance is not discounted because the effect of the time value of money is not material as amounts are normally settled between 30 days and 12 months. The recoverability of debts is assessed on an ongoing basis and provision for impairment is made based on objective evidence and having regard to past default experience. The impairment charge is recognised in profit or loss. Debts which are known to be uncollectible are written off. Investments Investments at fair value through profit or loss are investments in unlisted trusts and unlisted companies which are held at fair value, with movements recognised in the Consolidated Statement of Comprehensive Income. Fair value is determined by reference to the net assets reported by the relevant investment manager as at close of business on the day the trust or company is being valued. Investments at amortised cost refer to term deposits with maturity of more than 12 months. These are stated at the principal amount less any expected significant credit losses. Investments in subsidiaries are initially recognised at cost which equates to the fair value of consideration provided, and are subsequently carried in the Company s consolidated financial statements at cost less any accumulated impairment losses. Dividends from the subsidiaries are recognised as income on an accruals basis on the date the dividends are declared. 14

17 3 Summary of significant accounting policies (continued) (h) Property, plant and equipment Plant and equipment is initially recorded at cost which is the fair value of consideration provided plus incidental costs directly attributable to the acquisition. All items of plant and equipment are carried at cost less accumulated depreciation and accumulated impairment charges. Items are depreciated using the reducing balance method at rates based on the expected useful lives of the assets taking into account estimated residual values. Depreciation rates and residual values are reviewed annually and any changes are accounted for prospectively. The depreciation rates currently used for each class of asset are as follows: Depreciation rate Depreciation method Plant and equipment 13.5% - 40% Reducing balance Computers 40% Reducing balance Office furniture & fittings 13.5% - 20% Reducing balance Paintings 1.8% -20% Reducing balance The carrying amount of each class of plant and equipment is reviewed each reporting date by determining whether there is an indication that the carrying value of a class may be impaired. If any such indication exists, the item is tested for impairment by comparing the recoverable amount of the asset to the carrying value. An impairment charge is recognised whenever the carrying value exceeds the recoverable amount. Impairment charges are recognised in profit or loss and may be reversed where there has been a change in the estimates used to determine the recoverable amount. (i) (j) (k) Leased property, plant and equipment Leases of property, plant and equipment are classified as operating leases where the lessor retains substantially all of the risks and benefits of ownership. Payments made under operating leases are charged against profits in equal instalments over the accounting periods covered by the lease term, except in those circumstances where an alternative basis would be more representative of the pattern of benefits to be derived from the leased property. Intangible assets Scheme management rights are intangible assets and amortised on a reducing balance basis over the first four years of the expected life of seven years of the rights acquired and on a straight-line basis for the remaining three years. The assets are reviewed for impairment annually by preparing a calculation of the present value of the expected future cash flows of the management rights acquired, based on forecast for future growth rates and discounted using a risk adjusted discount rate. Where the present value is less than the carrying amount, an impairment charge is recognised. Trade and other payables Trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received. The balance is not discounted because the effect of the time value of money is not material as amounts are normally settled within 30 days. 15

18 3 Summary of significant accounting policies (continued) (l) Employee entitlements Share based payments Retention incentive The Company provides a retention incentive for one of its senior employees. The incentive offered is determined with reference to a specified number of shares multiplied by the value of a share in the Company as determined at the end of the incentive performance period. The value of a share in the Company at the end of the performance period is determined in accordance with the valuation principles applicable to shares issued by the Company under its Executive Share Purchase Scheme rules. To receive the retention incentive, the employee must be employed for the whole of the performance period. To apply for and retain shares in the Company, the individual must remain in the employment of the Company. The incentive is accounted for as a cash settled share based payment and the fair value of the liability payable by the Company under these arrangements is measured at each reporting date (refer to Note 2(d)). Increases or decreases in the fair value of the cumulative liability at each reporting date are recognised in the reported profit or loss for the period. Long term incentive A long term incentive plan was introduced in 2015 whereby eligible employees may be awarded a bonus, payable at the end of a three year vesting period, subject to certain performance hurdles being met. The total amount payable is to be recognised over the three year period from the date the employees become entitled to the payment. The entitlement will be forfeited if the employee is no longer in the service of the Company, unless the Company determines otherwise. Wages, salaries and annual leave The provisions for employee entitlements to wages, salaries and annual leave represents the amount which the entity has as a present obligation to pay resulting from employees services provided up to the balance date. Long service leave The provision for employee entitlements to long service leave represents the amount which the entity has as a present obligation to pay resulting from employees services provided up to the balance date. Superannuation funds The Company contributes to superannuation funds on behalf of its employees. Such contributions are charged against income as incurred. (m) Dividends payable Dividends payable are provided when dividends are declared by directors and represent the cash amounts payable to shareholders. 16

19 3 Summary of significant accounting policies (continued) (n) Standards issued but not yet effective There are no new standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July that have a material impact on the Group. The following standards were available for early adoption but have not been applied in the financial statements for the reporting period ended 30 June. The assessment of the impact of these new standards (to the extent relevant to the Group) and interpretations is set out below. (a) AASB 9 Financial Instruments (and applicable amendments) (effective from 1 July for the Group) AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement. It includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets and new general hedge accounting requirements. It also carries forward the guidance on recognition and de-recognition of financial instruments from AASB 139. Classification of financial assets and financial liabilities AASB 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. The standard includes three principal classification categories for financial assets: measured at amortised cost; fair value through other comprehensive income (FVOCI); and fair value through profit or loss (FVTPL). It eliminates the existing AASB 139 categories of held to maturity; loans and receivables; and available for sale. Based on the Group's assessment this standard is not expected to have a material impact on the classification of financial assets and financial liabilities of the Group. This is because: financial instruments currently measured at amortised cost are: cash and cash equivalents, receivables and non-current term deposits. These instruments will continue to be measured at amortised cost under AASB 9; financial instruments currently measured at FVTPL under AASB 139 are designated into this category because they are managed on a fair value basis for investment purposes. Accordingly, these financial instruments will continue to be measured at FVTPL under AASB 9; investments in subsidiaries are measured at cost as per AASB 127 and the impairment requirements under AASB 9 are not expected to have a material impact. Impairment of financial assets The new impairment model will apply to financial assets measured at amortised cost. Based on the Group's assessment, changes to the impairment model are not expected to have a material impact on the financial assets of the Group because these financial assets are of high quality and/or highly accessible. Also, processes are in place to assess the credit worthiness of counterparties and to ensure receivables from clients are collected in a timely manner. Accordingly, any credit losses on such assets are expected to be small. Hedge accounting The Group does not apply hedge accounting. 17

20 3 Summary of significant accounting policies (continued) (n) Standards issued but not yet effective (continued) (b) AASB 15 Revenue from Contracts with Customers (effective from 1 July for the Group) The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 Revenue. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer - so the notion of control replaces the existing notion of risks and rewards. The Group s main source of income is management fees which are recognised when services are provided. The Group may also earn performance fees when certain performance hurdles are met (refer to Note 3b). Based on the assessment performed, the Group does not expect that there will be any material change to the timing or manner of revenue recognition. The Group s other sources of income are interest, dividends distributions, and gains on financial instruments held at fair value. All of these are outside the scope of the new revenue standard. (c) AASB 16 Leases (effective from 1 July 2019 for the Group) This is a new standard that introduces new requirements for the recognition of lease assets and lease liabilities in the Consolidated Statement of Financial Position, with classification of current or non-current assets and liabilities with reference to the period over which the entities are expected to benefit from the lease. The classification of the lease asset and lease liability will be determined with reference to the period over which the Company is expected to benefit from the lease and will be disclosed as current or non-current accordingly. The new standard will likely result in a reduction in the Company s occupancy expenses (rent) as lease costs will instead be allocated against the lease liability. The lease asset will be amortised over the life of the lease resulting in a depreciation and amortisation charge. The depreciation and amortisation charge is expected to approximate the reduction in occupancy expenses. The Company will disclose the unwinding of the discount on the lease liability as a financing cost in the Consolidated Statement of Comprehensive Income. The new standard is expected to impact leases which are currently classified by the Company as operating leases; primarily the lease of office space in Australia. 4 Auditors remuneration Consolidated Company Audit services Auditors of the Group - KPMG 80,250 72,750 53,350 53,350 Other services 399, , , , , , , ,043 Other services provided by the auditors include trust audits, reporting on compliance plans, derivatives risk statements, tax and consultancy services and reporting to regulatory authorities. 18

21 5 Taxation (a) Income tax expense reconciliation Consolidated Company Prima facie income tax expense calculated at 30% (: 30%) of the profit for the year before income tax 9,935,277 6,088,102 3,087,525 3,193,072 Increase in income tax expense due to: Non-deductible expenses 10,085 4,121 10,085 4,121 Under/(over) provision in prior year 446,483 (410,499) 446,239 (410,667) Franking credits 6, , ,714 Franking tax offsets (22,357) - (1,995,285) (445,714) Total income tax expense 10,376,196 5,681,724 2,147,150 2,474,526 Total income tax expense is made up of: Current income tax expense 11,071,630 7,014,161 2,842,828 3,807,131 Under/(over) provision in prior year 446,483 (410,499) 446,239 (410,667) Deferred tax movement (1,141,917) (921,938) (1,141,917) (921,938) Total income tax expense 10,376,196 5,681,724 2,147,150 2,474,526 (b) Provision for current income tax / (Income tax receivable) Movements during the year were as follows: Balance at beginning of year 3,565,624 1, ,660 (968,894) Current income tax expense on operating profit 13,066,915 7,459,875 4,838,113 4,252,845 Income taxes paid during the year (7,083,985) (3,039,602) (2,630,305) (2,067,910) Under/(over) provision in prior year 446,483 (410,499) 446,239 (410,667) Franking tax offsets (1,995,285) (445,714) (1,995,285) (445,714) Balance at end of year 7,999,752 3,565,624 1,018, ,660 (c) Deferred tax assets - net Consolidated and Company Deferred tax asset comprises the estimated future benefit, at income tax rates applicable in the periods the benefit is likely to be realised, on the following items: Employee provisions 2,474,489 1,670,505 Deferred tax liability comprises the estimated future liability, at income tax rates applicable in the periods the liability is likely to be realised, on the following items: Unrealised gain on investments 477, ,078 Management rights (net of accumulated amortisation) 55, , , ,960 Deferred tax assets - net 1,941, ,545 19

22 6 Dividends Dividends paid in the current year by the Company are: (i) A fully franked dividend of per share (: 20.00) paid on 8 September (: 14 September 2016) 7,157,500 4,090,000 (ii) A fully franked dividend of per share (: 20.00) paid on 9 March (: 10 March ) 6,135,000 4,090,000 (iii) A fully franked dividend of per share paid on 21 June 10,000,050 - Dividend franking account 23,292,550 8,180,000 Estimated amounts of retained profits and reserves that could be distributed as franked dividends using franking credits already in existence before the payment of income tax provided for in the consolidated financial statements of the Group, and before deducting franking credits to be used in the payment of dividends. Consolidated Company Franked at 30% (: 30%) 13,703,073 18,390,488 12,893,168 18,219,977 The ability to utilise franking credits is dependent upon there being sufficient available retained profits to declare dividends. 7 Cash and cash equivalents Consolidated Company Cash on hand and at bank 2,274,681 1,766,520 2,242, ,067 Short term bank deposits at call and paying interest at an interest rate of 1.93% (: 2.10%) 15,522,328 9,336,559 4,906,694 4,749,099 Term Deposits ORFR* - 1,500,000-1,500,000 Term Deposits paying interest at an interest rate 2.68% (: 2.56%) 19,420,880 26,820,880 13,520,880 24,020,880 37,217,889 39,423,959 20,670,097 30,387,046 * Term Deposits ORFR for has been presented as investments (refer to Note 9 (b)). 8 Receivables Consolidated Company Current Sundry receivables 12,800 7,772 12,800 7,772 Service fees receivable - - 3,579,946 4,451,704 Accrued income and receivables 15,463,427 10,664,402 15,421,939 10,656,928 15,476,227 10,672,174 19,014,685 15,116,404 20

23 9 Investments (a) At fair value through profit or loss Consolidated and Company Shares in investments at cost 5,530,476 5,530,476 Fair value adjustments 1,590,504 1,226,928 Total investment at fair value through profit or loss 7,120,980 6,757,404 The Company has a 22.6% (: 22.8%) investment in Maple-Brown Abbott Small Companies Value Fund for which it acts as the Responsible Entity (refer to Note 19). The Company also has a 0.8% (: 1%) investment in Maple-Brown Abbott Funds PLC, a company incorporated in Ireland (refer to Note 20). Fair value adjustments in relation to these investments are reflected in the Statement of Comprehensive Income of the Group. (b) At amortised cost Consolidated and Company Term Deposits - ORFR 1,500,000 - Under APRA Prudential Standards SPS114: Operational Risk Financial Requirement (ORFR), the Maple- Brown Abbott Pooled Superannuation Trust (the Trust) for which the Company acts as RSE Licensee is required to maintain an ORFR target amount as a reserve of at least 0.25% of the Trust s net assets. The Company has elected to hold the financial resources to meet the ORFR target amount as operation risk trustee capital. This capital is held in a form that is equivalent to Common Equity Tier 1 Capital. In the prior year, the term deposit held for ORFR is presented as cash and cash equivalents (refer to Note 7). The ORFR reserve is part of the financial management of the Trust and is operated in accordance with the ORFR policy which is reviewed annually. The ORFR may be used in certain circumstances to address operational risk events or claims against the Trust arising from operational risk. (c) In subsidiaries - at cost The following table summarises the Company s shareholdings in subsidiaries: % % Maple-Brown Abbott (Asia) Pty Limited 52.5% 209, % 57,200 Maple-Brown Abbott Global Listed Infrastructure Pty Limited 50.5% % ,415 57,705 These investments are carried at cost. There are no significant restrictions on the ability of these subsidiaries to transfer funds to the Company in the form of cash dividends. 21

24 10 Other current assets Consolidated and Company Prepayments 544, , Property, plant and equipment Consolidated and Company Office furniture and equipment at cost 1,444,973 1,388,641 Less: Accumulated depreciation (1,219,651) (1,063,477) Total property, plant and equipment at net book value 225, ,164 Property, plant and equipment (reconciliation) Net book value at beginning of year 325, ,509 Additions at cost 60, ,054 Disposals at net book value (2,731) - Depreciation (157,911) (145,399) Net book value at end of year 225, , Intangible assets Consolidated and Company Scheme management rights at cost 14,000,000 14,000,000 Less accumulated amortisation (13,813,747) (12,323,727) Scheme management rights at net book value 186,253 1,676, Trade and other payables Consolidated Company Current Investment management service fees ,944,212 7,269,930 Accrued expenses 2,438,557 1,557,350 2,438,557 1,557,350 Trade and other payables 2,364,812 1,160, , ,084 4,803,369 2,717,591 17,057,151 9,312,364 22

25 14 Provision for employee benefits Consolidated and Company Current Retention incentive 422, ,000 Long term incentive - current 4,533,857 - Annual leave 1,018,879 1,012,547 Long service leave - current 1,362, ,675 7,337,091 2,467,222 Non-current Long term incentive - non-current 750,000 2,722,928 Long service leave - non-current 161, , ,206 3,101, Equity (a) Share Capital Consolidated and Company Shares Shares Ordinary shares 204, ,500 10,847,270 10,847,270 No shares were issued in the current year or prior year. The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. The holders of ordinary shares are entitled to receive dividends (refer to Note 6) as declared from time to time and are entitled to one vote per share at meetings of the Company. 23

26 15 Equity (continued) (b) Non-controlling interests The following table summarises the information relating to each of the Group s subsidiaries that has material non-controlling interests (NCI), before any intra-group eliminations. Asia GLI Total Asia GLI Total NCI percentage 47.50% 49.50% 48.00% 49.50% Current assets 10,814,012 19,719,480 10,413,135 5,901,182 Current liabilities 4,359,460 7,892,246 4,745,907 3,586,918 Net assets 6,454,552 11,827,234 5,667,228 2,314,264 Carrying amount of NCI 3,065,912 5,854,481 *8,920,393 2,720,269 1,145,561 3,865,830 Total comprehensive income 7,287,324 11,912,969 5,245,292 2,237,612 Profit allocated to NCI 3,461,479 5,896,920 9,358,399 2,517,740 1,107,618 3,625,358 Cash flows from operating activities 2,185,848 5,772,000 3,985,575 1,243,025 Cash flows from investing activities 40,928 30,850 22, Cash flows from financing activities (3,087,500) (1,188,000) (960,000) - Net (decrease)/increase in cash and cash equivalents (860,724) 4,614,850 3,048,232 1,243,368 *Note that this is amount is gross of 21,000 dividends paid to the departed shareholder before the acquisition of interest by the Company. During the year, the Group acquired 0.50% interest in Maple-Brown Abbott (Asia) Pty Limited for 152,710, increasing its ownership from 52% to 52.50%. In, there was no change in ownership. Equity reserve is used to record the differences described in Note 3(a) which may arise as a result of transactions with non-controlling interests that do not result in a loss of control. On consolidation the effect of the acquisition resulted in the movement in reserves of 124,374 (: nil) to reflect the consideration paid for the shares acquired in the subsidiary over their paid up value and the movement in the equity and retained earnings brought forward. 16 Commitments The estimated minimum amount of commitments not provided for in the financial statements as at 30 June is: Consolidated and Company Operating lease commitments Future operating lease rentals of premises not provided for in the consolidated financial statements and payable: No longer than one year 835, ,033 Longer than one year but not later than five years 1,095,495 1,931,305 1,931,304 2,714,338 24

27 16 Commitments (continued) The lease commitment in respect of premises is subject to fixed increases each year on 1 September. The current lease expires on 31 August 2020, with an option to renew for a further five years from the expiry date. The lease commitments in respect of two items office equipment will expire in November 2020 and 2022, respectively. Controlled subsidiaries The Company has arrangements in place to purchase shares from the minority shareholders in its controlled subsidiaries, in the event of the cessation of their employment with the Company. In respect of Maple-Brown Abbott (Asia) Pty Limited (MBA Asia), under the rules of MBA Asia s Executive Share Purchase Scheme (ESPS), MBA Asia may purchase shares from participating employees who are deemed to have disposed of their shares as a result of the cessation of their employment with the Company and where MBA Asia has not nominated another buyer of those shares. As at 30 June, no amount was due under this Scheme. In respect of Maple-Brown Abbott Global Listed Infrastructure Pty Limited (MBAGLI), if a principal shareholder s employment ceases, they are taken to have given notice to MBAGLI to dispose of their shares. MBAGLI can purchase shares in certain circumstances which requires major shareholder approval. In the event that MBAGLI do not acquire the shares, the Company will become responsible for procuring another purchaser. There were no terminations of any principal s employment during the financial year. 17 Remuneration Retention incentive During the year an amount of 446,860 (: 406,090) was paid to employees in respect of the retention incentive share scheme. Consolidated and Company Increase/(reduction) in fair value of liability in respect of: Retention incentive scheme 446, ,090 Retention incentive scheme payment (446,860) (406,090) Long term incentive - - The entitlement arising during the 2015 financial year is being recognised as an expense over the three years ending 30 June 2016, and. The entitlement arising during the financial year is being recognised as an expense over the three years ending 30 June, 2019 and Consolidated and Company Entitlement year ,810,929 2,004, ,000-2,560,929 2,004,543 25

28 18 Notes to the Statement of Cash Flows (i) (ii) Reconciliation of cash For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank. Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position (refer to Note 7). Reconciliation of profit from ordinary activities after income tax to net cash provided by operating activities Consolidated Company Profit from ordinary activities after income tax 22,741,394 14,611,950 8,144,600 8,169,046 Adjustment for: Dividend received from subsidiaries - - (4,603,500) (1,040,000) Distributions received from investments (130,646) (45,502) (130,646) (45,502) Movement in fair value of investments (363,576) (529,303) (363,576) (529,303) Interest received (1,308,472) (421,290) (1,159,984) (373,396) Loss on disposal of non-current assets 2,731 2,731 - Amortisation of intangibles 1,490,020 1,399,903 1,490,020 1,399,903 Provision for employee benefits 2,679,946 2,195,080 2,679,946 2,195,080 Depreciation 157, , , ,399 Net cash provided by operating activities before changes in assets and liabilities 25,269,308 17,356,237 6,217,502 9,921,227 Changes in assets and liabilities during the financial year: (Increase)/decrease in receivables (4,804,053) (3,501,975) (3,898,281) 1,570,085 Decrease in income tax receivable ,894 Increase in other current assets (185,872) (13,478) (185,872) (13,478) Increase/(decrease) in trade and other payables 2,085, ,990 7,744,787 (5,328,998) Increase in deferred tax asset - net (1,141,917) (921,938) (1,141,917) (921,938) Increase in provision for current income tax 4,434,128 3,564, , ,660 Net cash provided by operating activities 25,657,372 17,369,896 9,394,981 6,555,452 26

29 19 Related party disclosures Directors and Key Management Personnel The Directors of the Company are regarded as being Key Management Personnel of the Company. The names of each person holding the position of Director of the Company during the financial year were Mr J K Kightley, Mr T T Robinson, Mr R A R Lee, Ms J A Elliott, Mr G M Rossler, Mr R A Grundy, Mr G R Bazzan, and Mr D L Maple-Brown. Details of compensation of Key Management Personnel, is as follows: Consolidated and Company Short term employee benefits 4,480,652 3,376,370 Share based payments (1) 369, ,090 Other long term benefits 340, ,658 Post-employment benefits 128, ,297 Total compensation 5,317,734 4,698,415 (1) The amount shown for Share based payments represents a net charge to profits after any adjustment to account for increases or decreases in the estimated price of the shares upon which the provision is based. Share based payments made during the year amounted to 446,860 (: 406,090). Directors remuneration does not include insurance premiums paid by the Company or related parties in respect of Directors and Officers Liabilities and Legal Expenses insurance contracts, as the insurance policies do not specify premiums paid in respect of individual directors. Directors shareholdings/dividends Dividends paid by the Company during the year in respect of shares in which Directors held an interest during the year amounted to 3,246,150 (: 1,140,000). Loans to Directors There were no new loans made to Directors by the Company during the year and no loans to Directors are outstanding under the Executive Share Purchase Scheme at the end of the year. Transactions with subsidiaries The Company pays the subsidiaries for the investment management fees as consideration for the services provided by the subsidiaries. The fees charged to the Company during the year and balances outstanding at year end are set out below. Investment management service fees 42,769,632 23,092,734 Balance payable 13,944,212 7,269,930 27

30 19 Related party disclosures (continued) Transactions with subsidiaries (continued) On the other hand, the Company receives service fees from the subsidiaries based on the costs directly attributable to the subsidiaries and a share of business support costs. The service fees billed by the Company during the year and balances outstanding at year end are set out below. Service fees 15,522,656 12,457,621 Balance receivable 3,579,946 4,451,704 Transactions with other related parties The Company is the Responsible Entity or RSE Licensee for a number of registered and unregistered managed investment schemes and registrable superannuation entities ( Trusts ) from which it derives fees on terms and conditions in accordance with each Trust s product disclosure statement, constitution or trust deed. The fees (net of rebates) charged to the Trusts during the year and balances outstanding at year end are set out below. Fees charged (net of rebates) 18,901,347 18,977,589 Balance receivable 1,544,785 1,558,632 The Company has a 52.5% (: 52%) interest in a subsidiary, Maple-Brown Abbott (Asia) Pty Limited. The subsidiary provides investment management services to the Company. As at 30 June the carrying value of the Company s interest in the subsidiary was 210,415 (: 57,200). The Company also has a 50.5% (: 50.5%) interest in a subsidiary, Maple-Brown Abbott Global Listed Infrastructure Pty Limited. The subsidiary provides investment management services to the Company. As at 30 June the carrying value of the Company s interest in the subsidiary was 505 (: 505). In 2016, the Company invested 2,000,000, as seed capital in the Maple-Brown Abbott Small Companies Value Fund for which it acts as the Responsible Entity. The Company may purchase and sell units in the fund in the ordinary course of business at application and redemption prices calculated in accordance with the Constitution of the Fund. The transactions with the fund are carried out on the same terms and conditions as for other unitholders in the fund. Under investment management services agreements with its subsidiaries, the Company pays investment management fees, after deducting the cost of providing employees and resources, to those subsidiaries. Disclosure of Interests in Other Entities The Company is exposed to certain risks in relation to the managed investment schemes for which it acts as the Responsible Entity. Since these entities have management contracts with the Company and may share the Maple-Brown Abbott name, the Company is exposed to certain reputational risks and economic risks. The economic risk during the year relates to the management fee income from the managed investment schemes, and the management fee receivable at the year-end. This information is disclosed in the above note. 28

31 20 Financial instruments Risks and capital management objectives The Group activities expose it to a variety of risks: market risk (including price risk, interest rate risk and currency risk), liquidity risk, and credit risk. The Group seeks to minimise the Group s financial risks through a variety of activities, including hold cash and term deposits or investments in well diversified and highly liquid underlying equities. The nature and extent of the financial instruments outstanding at the balance date and the risk management policies employed by the Group are set out below. (a) Market risk Market risk is the risk that the value of a financial instrument will change as a result of exposure to market price changes, interest rate changes and currency movements. (i) Price risk Market exposures Total price risk is minimised through the Group s selection of investments in managed investment schemes which hold listed equities and are priced daily. The Group is principally exposed to market price risk through its investment at fair value through profit or loss (refer to Note 9a). The table below details the approximate change in net assets attributable to members if there is a change in the relevant benchmarks: % change % change Increase in benchmarks , ,703 Decrease in benchmarks 10 (633,227) 10 (612,703) 29

32 20 Financial instruments (continued) (ii) Interest rate risk The Group monitors the overall exposure to cash and consequently interest rate sensitivity on a daily basis. The carrying value of the Group s financial assets reflects the interest accrued to 30 June. Therefore a change in interest rates at the reporting date would not affect profit or loss. The Group s exposure to interest rate risk for classes of financial assets and financial liabilities is set out below: Consolidated Securities contracted to mature or be repriced in: Floating interest rate 1 year or less Over 1 year to 5 years Non-interest bearing Total Financial assets Cash at bank and deposits 17,797, ,797,009 Term deposits - 19,420, ,420,880 Investments at amortised cost - 1,500, ,500,000 17,797,009 20,920, ,717,889 Financial assets Cash at bank and deposits 11,103, ,103,079 Term deposits - 28,320, ,320,880 11,103,079 28,320, ,423,959 Company Securities contracted to mature or be repriced in: Floating interest rate 1 year or less Over 1 year to 5 years Non-interest bearing Total Financial assets Cash at bank and deposits 7,149, ,149,217 Term deposits - 13,520, ,520,880 Investments at amortised cost - 1,500, ,500,000 7,149,217 15,020, ,170,097 Financial assets Cash at bank and deposits 4,866, ,866,166 Term deposits - 25,520, ,520,880 4,866,166 25,520, ,387,046 30

33 20 Financial instruments (continued) (a) Market risk (continued) (iii) Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates in which the value of these financial instruments are denominated in a currency other than the functional currency (AUD) of the Group. The table below shows the comparative numerical currency exposure of the Group s financial assets and liabilities. The Group has no material exposure to net monetary financial assets designated in a foreign currency. Accordingly, no sensitivity analysis has been disclosed. Consolidated At 30 June At 30 June Investments Net Monetary Assets/ (Liabilities) Total % Investments Net Monetary Assets/ (Liabilities) Total % EUR 2,808,355 (116,556) 2,691, ,497,427 (81,803) 2,415, GBP 1,176,258 1,648,860 2,825, ,170,567 1,074,551 2,245, USD 1,252,922 5,568,675 6,821, ,238,696 3,192,215 4,430, CAD - 1,877,725 1,877, (2,938) (2,938) 0.0 SGD - (68,375) (68,375) (0.1) - (20,020) (20,020) 0.0 AUD 3,383,445 38,980,418 42,363, ,850,714 43,216,537 45,067, Total 8,620,980 47,890,747 56,511, ,757,404 47,378,542 54,138, Company At 30 June At 30 June Investments Net Monetary Assets/ (Liabilities) Total % Investments Net Monetary Assets/ (Liabilities) Total % EUR 2,808,355 (116,556) 2,691, ,497,427 (81,803) 2,415, GBP 1,176,258 1,648,860 2,825, ,170,567 1,074,551 2,245, USD 1,252,922 5,568,675 6,821, ,238,696 3,192,215 4,430, CAD - 1,877,725 1,877, (2,938) (2,938) 0.0 SGD - (68,375) (68,375) (0.2) - (20,020) (20,020) 0.0 AUD 3,383,445 13,717,302 17,100, ,850,714 32,029,081 33,879, Total 8,620,980 22,627,631 31,248, ,757,404 36,191,086 42,948,

34 20 Financial instruments (continued) (b) Liquidity risk Liquidity risk is minimised through the Group maintaining sufficient cash and selecting highly liquid investments. The table below shows other financial liabilities grouped into relevant maturities based on the remaining period at 30 June to the contractual maturity date: Consolidated Less than 1 month 1-3 months 3-12 months More than 12 months Total Trade and other payables 4,803, ,803,369 Total 4,803, ,803,369 Trade and other payables 2,717, ,717,591 Total 2,717, ,717,591 Company Less than 1 month 1-3 months 3-12 months More than 12 months Total Trade and other payables 3,112,939 13,944, ,057,151 Total 3,112,939 13,944, ,057,151 Trade and other payables 2,042,434 7,269, ,312,364 Total 2,042,434 7,269, ,312,364 32

35 20 Financial instruments (continued) (c) Credit risk The Group has a credit risk exposure in relation to its undertaking transactions with counterparties such as discrete clients, responsible entities of registered schemes, banks and other financial intermediaries. All bank bill securities held by the Group are endorsed or accepted by major Australian trading banks. At 30 June the Standard & Poor s credit rating for cash and cash equivalents is set out below. Consolidated Company Credit rating Cash on hand Cash at bank - WBC 2,274,181 1,766,020 2,242, ,567 A1+ Deposits at call with banks - NAB 15,522,328 9,336,559 4,906,694 4,749,099 A1+ Term deposits with banks: NAB 15,920,880 8,320,880 10,020,880 5,520,880 A1+ WBC 5,000,000 20,000,000 5,000,000 20,000,000 A1+ Total 38,717,889 39,423,959 22,170,097 30,387,046 The Group and Company have an exposure to credit risk for receivables at 30 June of 15,476,227 (: 10,672,174) and 19,014,685 (: 15,116,404) respectively. Based on historic default rates, the Group and Company is of the view that no impairment allowance is necessary. The Group undertakes a minimal number of investment transactions during the year. Accordingly, this aspect of credit risk exposure is minimal. (d) (e) (f) Derivatives The Group does not use derivatives in the management of the Group s assets. Carrying amounts versus fair values The carrying amount of the financial assets and liabilities approximates their fair value due to their shortterm nature. Fair value measurement recognised in the Statement of Financial Position The fair value measurement disclosures use a three-tier value hierarchy that reflects the significance of the inputs used in measuring fair values. The fair value hierarchy is comprised of the following levels: o o Level 1 fair values measured using quoted prices (unadjusted) in active markets for identical instruments; Level 2 fair values measured using directly (i.e. as prices) or indirectly (i.e. derived from prices) observable inputs, other than quoted prices included in Level 1; and o Level 3 fair values measured using inputs that are not based on observable market data (unobservable inputs). 33

36 20 Financial instruments (continued) (f) Fair value measurement recognised in the Statement of Financial Position (continued) The Australian and overseas listed investments held via unlisted entities are classified as follows: Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss Maple-Brown Abbott Small Companies Value Fund - 1,883,445-1,883,445 Maple-Brown Abbott Funds PLC sub-funds: Maple-Brown Abbott Asia Pacific ex-japan Fund 1,089, ,089,569 Maple-Brown Abbott Asia ex-japan Fund 1,795, ,795,319 Maple-Brown Abbott Global Infrastructure Fund 2,352, ,352,647 Total 5,237,535 1,883,445-7,120,980 Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss Maple-Brown Abbott Small Companies Value Fund - 1,850,714-1,850,714 Maple-Brown Abbott Funds PLC sub-funds: Maple-Brown Abbott Asia Pacific ex-japan Fund 957, ,415 Maple-Brown Abbott Asia ex-japan Fund 1,608, ,608,153 Maple-Brown Abbott Global Infrastructure Fund 2,341, ,341,122 Total 4,906,690 1,850,714-6,757,404 Transfers between levels The Group s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There have been no transfers between levels in the fair value hierarchy at the end of 30 June and 30 June. There were also no changes made to any of the valuation techniques applied as of 30 June. Fair value measurement Fair value in an active market (level 1) The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and equity securities) are based on quoted prices. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. An active market is a market in which transactions for the financial asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. 34

37 20 Financial instruments (continued) (f) Fair value measurement recognised in the Statement of Financial Position (continued) Fair value in an inactive or unquoted market (level 2 and 3) The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques. Quoted market prices or dealer quotes for similar instruments are used for debt securities held. The Company may use a variety of valuation methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Valuation techniques used for non-standardised financial instruments, such as over-the-counter derivatives, include the use of comparable arm's length transactions, reference to the current fair value of a substantially similar other instrument or any other valuation technique that is commonly used by market participants which maximises the use of market inputs and relies as little as possible on entity-specific inputs. For other pricing models, inputs are based on market data at the end of the reporting period. The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions held. Valuations are therefore adjusted, where appropriate, to allow for additional factors including liquidity risk and counterparty risk. Fair value measurements using significant unobservable inputs (level 3) The Company did not hold any financial instruments with fair value measurements using significant unobservable inputs during the year ended 30 June or year ended 30 June. The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques. This is determined by reference to the net assets reported by the relevant investment manager as at close of business on the day the trust or company is being valued. 21 Parent only financial statements The Company is applying ASIC Class Order [CO 10/654] which permits entities to continue to include parent entity financial statements in their financial reports. 22 Events subsequent to balance date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. 35

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